Abstract

The question how much money society should pay to persons without own income (i. e. the social minimum; in Germany called “Regelsatz”) has been debated extensively in Germany. A complicated procedure has been developed to derive the social minimum from the typical consumption of average lower income persons. Although the procedure as a whole is not unreasonable, it includes several standardised components which have been the cause of severe criticism and the reason for demands to raise the Regelsatz. The goal of this article is to determine the degree of consistency of the Regelsatz with the aims of the German social security system.
We do not use the criticized “official” calculation procedure. Instead we start with the goals society has set to specify the social minimum. As these goals are formulated in an imprecise way we defined a “maximum case” and a “minimum case”. Then we deduce two baskets of goods consistent with those goals, respectively the two cases. Finally we determine the prices of all goods in the baskets using the actual cost of products in Germany. We find that the German Regelsatz is about 16 % above the amount consistent with the maximum case and is twice as high as the amount consistent with the minimum case.

JEL-Klassifikation: H53, H55, I31